Could business cluster be solution to Maine’s fragmented food industry?

BDN File | BDN

BDN File | BDN

A recent report from the Harvard Kennedy School, “Growing Maine’s Food Industry,” suggests that Maine could take better advantage of its organic farms, fishing and culinary talent by forming business clusters that promote collaboration and offer better potential to market Maine food products to major buyers throughout the Northeast.

There’s much talk about Portland’s farm-to-fork movement, Aroostook County as the state’s resurging breadbasket, the growth in organic produce, more young farmers moving to Maine than most other states, exploding numbers of farmers markets and the diversification of farming.

But a recent report from the Harvard Kennedy School said Maine’s food and beverage industry is fragmented and still has a long way to go to fully take advantage of its food expertise. One solution the report recommends: mustering pockets of specialization into a business accelerator. That could stimulate coordination among the state’s several dozen food and beverage trade groups and more than 100 support system organizations.

The food and beverage industry employs about 50,000 Mainers, the report’s authors note.

“We’re not strong in food clusters in Maine, so it’s hard to be competitive,” said Betsy Biemann, director of the Maine Food Cluster Project and former head of the Maine Technology Institute.

In October, the project issued a report, “Growing Maine’s Food Industry, Growing Maine,” that compared Maine to cluster initiatives in Vermont, Oregon and Denmark, discussed strengths and weaknesses in Maine’s industry, and advocated for a food accelerator along the lines of other cluster initiatives such as those in technology.

The study, sponsored by a grant from Portland-based Libra Foundation, surveyed more than 300 businesses in the state to determine how Maine can grow its food industry to create jobs and generate economic growth.

Maine already ranks second in the United States for employment in its fish and fishing products, 21st for food processing, 26th for agriculture and 49th for livestock processing. Employment in agriculture is the greatest, with 9,417, followed by fish and fishing products at 7,040, food manufacturing at 4,853 and livestock processing at 103, based on numbers from 2012.

The report also notes positive trends in Maine’s food industries, including lobster, scallops, aquaculture, craft beer and natural and organic food sales, which have grown and spawned new companies. Farmers and fishermen also are innovating and adding value to agricultural and marine products, including by lengthening the production seasons. But more needs to be done.

“We looked at regions and places where certain types of companies were successful,” Biemann said. “The location of companies and their surroundings yielded financial success.”

She defines clusters as groups of related companies in a region with shared technology, shared suppliers or markets and supporting companies, universities and public agencies.

Working in Maine’s favor are its abundant farmland and water, the productive Gulf of Maine and access to large markets in the Northeast.

Notably, the researchers also studied cluster initiatives elsewhere that have done well. In Vermont, for example, a 2009 statewide “Farm to Plate” initiative helped spur a 35 percent rise in food manufacturing jobs and a 6 percent increase in the number of food companies. The agriculture sector added almost 4,200 jobs.

Biemann said the primary driver for cluster development in Denmark is a large company, and in Oregon it is trade associations.

Maine’s challenges include its small internal market for goods and its broad geography. It’s expensive to get food to market, distribution has gaps or bottlenecks, labor may not be available and government regulations can stymie food producers, according to the study. Biemann also mentions the lack of slaughterhouse capability as an issue, as well cold storage.

“We need to invest more in innovation and to add more value to the food we do produce,” said Biemann. “And we need to move more production from commodity to high value-added food.”

“One key way to leverage [Maine’s] potential is greater collaboration among the business community and cluster support organizations — as we see in other states like Vermont and Oregon — to build an action plan that is focused on strengths, while also addressing gaps, to grow these industries and create jobs,” Karen Mills, a senior fellow to the project and a former administrator of the U.S. Small Business Administration, said in a statement when the study was released.

Biemann said the Kennedy School is interested in how the public and private sectors are connecting to solve problems, which is why it looked at Maine’s food cluster as well as others around the country. It has a mapping portal that it launched last summer for workers in economic development, the research community and practitioners. Included is information about what the school learns about how a cluster is performing.

The study used cluster-analysis tools from the Harvard Business School to look at and pull together data of Maine’s economic performance. It also surveyed food business leaders and companies and asked their perception of their industry, business environment and resources. Finally, it looked at how Maine is organized to support the growth of its existing clusters.

“As we grow our farms and compete regionally and nationally, we need access to expertise and capital that sometimes is hard to find here,” said Lisa Webster, owner of North Star Sheep Farm and president of the Agricultural Council of Maine, when the report was released. “Several of the report’s recommendations could help Maine farms connect with the resources that they need to grow to that next scale of operations and success.”

“Better infrastructure to support those farmers who wish to scale and grow is critical to the growth of Maine’s food cluster overall,” he said.

The Harvard report concludes by saying that while cluster analysis can highlight potential growth opportunities, ultimately Maine’s food business leaders, food system advocates, investors and others need to come together and define a growth plan.

Three potential focus areas are scaling up food processing to add value and boost productivity; working with growth-oriented, mid-sized companies looking to expand sales outside of Maine; and exploring industry niches where Maine businesses can product sustainable food and beverages, as the world’s demand for protein is expected to double by 2050.

Biemann said another strength of Maine is that it is able to attract new farmers, who in turn add new jobs in some regions. And while they are trying to feed their local communities, Biemann said, “They also need to expand the market so they don’t cannibalize each other.”